IATA report: Ukrainian crisis and air transport
DALLAS – Willie Walsh, Director General of IATA, shared the association’s perspective on the war in Ukraine and the ensuing humanitarian crisis. His words are followed by an analysis of IATA, ranging from safety concerns to the impact of soaring oil prices.
Walsh’s statement began by condemning the war in Ukraine: “I am appalled by Russia’s illegal invasion of Ukraine and I stand in solidarity with the beleaguered Ukrainian people.
He continued, “Aviation promotes peace and freedom by bringing people together, but that peace has been broken at a horrendous human cost. My heart goes out to all the people of Ukraine, including industry partners and colleagues. »
Impact on IATA settlement systems
IATA reported that its settlement systems are facing new challenges due to the dramatic reduction in connectivity between Russia and the rest of the world. The association’s settlement systems process transactions between airlines and travel agents. It was designed to transfer funds from ticket sales to airlines, but in these extraordinary times the focus is on processing refunds for cancellations or delays.
IATA estimates that approximately 140 airlines participating in IATA’s Russian Billing and Settlement Plan, as well as thousands of travel agents worldwide, are affected. The situation has become increasingly difficult with the implementation of ever-increasing sanctions against Russia by Western nations.
ATC en route, unused slots
Interestingly, IATA provided an analysis of the impact of the Russian Aerospace shutdown in terms of RPK (revenue passenger-kilometres).
Airspace closures and route diversions affect more than 10% of pre-COVID-19 international travel volumes (RPK basis), including travel from Europe to Asia (4.5%), from North America to Asia (3.0%) and from North America to the Middle East. East (4.0%).
However, IATA reports that with the current level of air traffic, the actual number of flights with longer flight times is limited. Still, IATA is aware that the situation will require careful management as Asian markets ease restrictions and travel volumes continue to increase.
As an obvious consequence of airspace closures, IATA expects a large number of slots at key airports around the world to go unused. At the same time, other slots will need to be rescheduled to accommodate longer flight times.
The aviation body says it is working closely with the Global Airports Coordinating Group (slots) to ensure flexibility and share information on schedule updates as quickly as possible among stakeholders in aviation and passengers.
We took a closer look at the problems caused by the closure of Russian aerospace to Western countries, including Eurocontrol’s view on the matter.
Finally, IATA mentioned security issues as it monitors the development of the situation. A major area of attention is the availability in Russia of spare aircraft parts. IATA has made it clear that it has a long-standing policy of opposing sanctions that could lead to degradation of aviation safety, such as banning the export of the aforementioned items.
The association warned that banning Western-made spare parts could compromise the safety of all aircraft operating in or transiting over or near Russian airspace.
The IATA report added that there may be a need for planes that may need to divert to Russian airports in the event of an emergency.
Soaring fuel prices
Walsh concluded with an analysis of the enormous volatility in oil prices caused by the war, stating that “when we made our last financial forecast for the industry last fall, we expected the oil industry to air transport loses 11.6 billion US dollars in 2022 with Brent crude in the United States. $67/barrel and fuel representing 20% of costs.
He continued, “The price of oil soared to nearly US$130 a barrel. And it has been volatile in the US$95-110 range for a month. With fuel being an airline’s largest variable cost, absorbing such a massive price hike as the industry struggles to emerge from the two-year-long COVID-19 crisis is a huge challenge. If the price of oil remains this high, then over time it is reasonable to expect this to be reflected in airline returns.
Featured Image: Antonov Airlines UR-82060 Antonov An-225 Mriya. Photo: Lorenzo Giacobbo/Airways